Scotland's Property Scandal BBC Scotland Investigates

Scotland's Property Scandal

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There are 200,000 people working in the building trade in Scotland. But


the building trade in Scotland. But can you spot the professionals from


the cowboys? I'm in Edinburgh, a city renowned for its magnificent


architecture. But I've been looking at its attempts to conserve these


buildings and I've uncovered allegations of fraud and


institutional corruption at the Edinburgh has some of the most


historic buildings in the world. But could an attempt to save that


history sometimes be hastening its decline? And ripping off ordinary


scots at the same time. In Comely Bank near the centre of Edinburgh,


that's what Bruce Thompson thinks. We had a minor roof leak, which we


were quoted around �760 by a contractor. But to make sure all


his neighbours were happy and to make his historic tenement


watertight again they called an officer from the council. He had


one quick look at it and decided that it probably needed a new roof


and would report back to his boss. And the next thing we heard we had


a Statutory Notice telling us that The power is unique to Edinburgh.


Other places have statutory notices but this specific power is unique


to Edinburgh. The statutory notice Bruce is referring to is a power


that only the City of Edinburgh Council has, to keep its unique


buildings in good order. A superpower if you like. It means


owners have to pay for the work stipulated by the council whether


they like it or not. But back at Bruce's, it seemed the builders


weren't just on the roof. Work went on and on and on, more and more


scaffolding kept appearing, and we began to get a bit worried. As it


turns out, Bruce was right to be worried. The council decided his


building didn't just need a new roof, but a whole load of other


work. We just kept seeing great big chunks of stone being carted up


onto the roof and the contractors were polite and civil. We didn't


have any problems that way but they'd obviously been advised that


they weren't to speak to us about anything. There was certainly no


communication at all about cost. And we received a letter and it


tells the surveyor quite clearly on no account give these clients any


indication of cost as they do change day by day. So you were


expected to effectively have your cheque book open and let somebody


else fill in the numbers? That's what it seemed to be like, yes.


frustration, he used freedom of information laws to ask for details.


He felt it was the only way he could find out what the builders


were doing to his own home. Finally he received files and files of


paperwork. But they weren't exactly enlightening. This is edited,


blacked out to the extent that there's literally nothing to see,


page after page of it, I think. Another one, another one. I mean, I


don't know what they think they're going to give away, but it is just


stupid. Some of the Freedom of Information responses literally


told him nothing at all. But tucked away in the papers was an email


from a council official, describing Bruce's attempts to find out about


the work at his own home as a moan letter. When you saw this?


Horrified with that, horrified. And we sent that to the Chief Executive.


Do you feel that's a respectable way to treat someone? I feel it's a


disgusting way to treat anybody. The council now admit the email was


totally unacceptable. The Council decided to use its unique Statutory


Notice power once again. This time to get builders to overhaul the


back wall at Bruce's tenement whilst they were fixing the roof. A


job costing tens of thousands extra. It's not evenly done, it's up one


side not the other side. There's cracks all-over the stonework.


Bruce says he was told it would cost around �760 to fix the leak.


But after the council got involved his bill leapt to more than


�300,000. Almost a third of a million pounds.


On a scale of one to 10, how happy are you with the work that has been


I hear of another case across the city where the council have put a


statutory notice on the building. It's left the owners no choice


about what work is getting done. It turns out Emma-Jane Condon has also


had a leaky roof in her tenement. lot of times I'd get home and I'd


look out there with all the green meshing hanging down and just think


it was never going to end. Emma- Jane and her neighbours were told


they could expect a �90,000 repair bill to fix the roof. But then


curious things started to happen. So I was in here and the banging


was going on and I saw that crack appear. The council had been using


their superpower again. Emma-Jane got another statutory notice and


then another and another allowing the builder to do expensive


stonework. Scaffolding went back up. Sandstone stripped out from the


walls of their building started appearing in the skip. The trouble


was by the time we'd realised what they were doing they'd taken half


of it out. One of my neighbours who's experienced in this kind of


stonework - he works on buildings as an engineer - had looked at some


of the stonework in the skip and it was his view that there was no need


for that stone to be taken out of the building. So, they were taking


out perfectly good stone and replacing it with hew stone,


unnecessarily. When the scaffolding came down, the building appeared to


have been given a makeover most of which, Emma-Jane believes, was


simply cosmetic. The last we heard about the total cost of the


sandstone was it was a quarter of a million pounds. I think that what


they've done is seen this as an opportunity to do a Rolls-Royce job


on a building that wasn't necessary. And we can't afford the Rolls-Royce.


Emma-Jane and her neighbours expected a bill of around �90,000.


It's now around �300,000. I don't know if the ultimate conclusion of


this will be that I'll have to sell the flat because I can't afford the


I wanted to know if these bills could in fact be the real cost of


what was needed to be done. Was it possible that the owners simply


didn't want to pay? So I called in a couple of experts to look at


Gordon Murdie has been a quantity surveyor in Edinburgh for 38 years.


He has detailed experience of the statutory notice system and is used


as an expert witness in court. John Addison is a conservation engineer


brought in to work on high-profile projects across the country,


including Historic Scotland buildings. This is Bruce Thompson's


situation, he's in Comely Bank Place. John, you've taken a good


look at this property. assessment is that probably 95% of


it wasn't necessary. It seems that they got a little bit carried away


with themselves. It certainly surprised me that work on that


scale should have been carried out. The contractors said that they were


instructed to do all this work by the council. At Queen's Park Avenue,


our experts examined Emma-Jane's �300,000 worth of work. I just


wonder if they'd had a conservator to work on some of these features


up there, trying to reproduce that. Looks a bit rough. As well as


examining Emma-Jane's building we showed them a survey done six years


before the first statutory notice. Our experts say it gave no


indication major works was needed back then. They talked us through


their findings. If I could just refer to this drawing which


suggests the extent of the stonework repair as scheduled by


the council, this doesn't look like �300,000 worth of work either.


asked Gordon to give his opinion on a statutory notice. We asked if it


was clear what work needed to be done. This is an enormous latitude.


Repair, renew all defective and cracked stonework. The first step


at that point is to define what exactly is to be repaired, what is


to be renewed a stone schedule, a marked up drawing, define the costs.


There isn't a single repair noted. So it strikes me as very odd that


you've got an open-ended description of work on the stat


notice, which starts off with the word repair and the record drawing


as we see it doesn't actually have a single repair. Our experts have


found unnecessary work, over- charging even work that might make


a building worse. Driving around the city I can see


how Edinburgh's international reputation hangs on the quality of


its architecture. But perhaps Bruce's and Emma-Jane's were


isolated cases? Well, I've come across dozens of people complaining


about statutory notices right across the city. Each case is more


At Comely Bank Road, thousand of pounds of work was about to be


carried out under statutory notice. But James McLean who's one of the


owners challenged it. He says when he did, the council agreed some of


the work didn't need to be done. In Trafalgar Street in Leith, Bonita


Russell owns a cafe. She's having to close the business she's run for


more than 20 years after the bill for roof repairs soared to almost


�200,000. And also in Leith, on Commercial Street, Jeremy Pascoe


and his neighbours are expecting a It was becoming clear to me that


Bruce and Emma-Jane weren't the only ones unhappy with statutory


I've arranged to meet someone who used to issue the kind of statutory


notices we're talking about. His job was to decide what work needed


to be done, get builders on site and then oversee the work. I'm


hoping he will be able to give me a really good insight into what was


actually going on in the department He told me he had resigned, and he


was worried some of his colleagues were too eager to hand out


statutory notices. Basically, I think too many statutory notices


were being served by my colleagues. It seems some for got they were


serving the public and were too focused object on serving in thes.


As a surveyor your job was to determine what work was needed. I


suspected that builders were leading the job, adding more work,


and the officers were signing off the statutory notice. If council


officials were encouraged to hand out statutory notices, it goes some


way to explain the huge rise we've seen in Edinburgh. Over five years


the value of the building work has soared from �9 million in 2005 to


�30 million in 2010. Some people have got very rich. This money can


be a money spinner. The council also gets a stake. For it is role


it gets 15% of the final bill. If the costs go up, everyone's a


winner, except, of course, the homeowner who has to pay up. But


statutory notices were never meant to be like this. The power was


brought in to protect historic buildings, and to protect the


people on the streets below. In one instant she was with us, the next


she was gone. 11 years ago a waitress serve at Ryan's Bar in


Princes Street was killed after two foot long stones fell on her from


the third floor of the building. Eight people were injured. It


happened in the afternoon when the street was packed. Christine Foster,


from Australia, died in hospital less than an hour later. Her deaths


with a cruel reminder of the importance of looking after


Edinburgh's historic buildings. need statutory notice system, but


we need the right statutory notice system. Not just in Edinburgh, but


across the country. We need to preserve our built heritage, it's


absolutely vital. Ewan Aitken is a minister and the former lead r of


the City of Edinburgh Council. But for the last two years he has been


raising concerns about the way the power is being used. There are


issues about how decisions are made and what constitutes the need for a


statutory notice and then once that's in place how that work seems


to expand and expand and expand, all at the cost of the residents


who have no communication and who end up paying the bill. He says he


has evidence that builders doing the statutory notice work were


lining their own pockets. He claims that 13 addresses were charged for


top quality materials while the builders actually used very cheep


alternatives, more appropriate for a garden shed than historic


buildings. Surely, that would be fraud? A fraud, he says, he has the


paperwork to prove. This is the prime example of what I to be, at


least, illegal, if not corrupt, if those are two separate things, of


activity going on. There is hard evidence of this. That moons people


are being defrauded, in my view. It's not good enough to say, well,


we just thought we would put this down instead. The specialify


kaition, for which people are paying, should have been put on the


roofs. It seems to me to be pretty black-and-white. You wonder what


that means in terms of all the other work that has gone on.


Whether or not it was what people were paying for. Ewan Aitken has


passed this information to the police's Specialist Fraud Unit. So,


we know that builders are being investigated. We know that


homeowners are feeling they have been ripped off. We know that costs


have escalated. There's more. Within the council we had heard the


relationship between some officers and builders was far too cosy.


There are allegations of trips to lap-dancing clubs. This year,


around 15% of the council's Property Conservation Department


have been suspended. The council says the suspensions are,


"precautionary". We also know the council's hospitality records, up


to 2009, have been lost. To find out more about this relationship


between council officials and builders, possibly even amounting


to corruption, I went back to our informant. He told me that the


system was wide open to abuse, including bribery. In theory, it


would have been easy to a add costs to the notice. The checks were lax.


The contractor would get money they weren't entitled to. Once, a


contractor offered me a free kitchen or a free bathroom. I


suspect, if I'd said yes, it probably would have happened.he was


throwing out a fishing line and seeing if I took the hook. I don't


know what anyone else was offered. It was a relationship that, I think,


We can't verify that what our surveyor is saying about the


builders and council officials is true. But Lothian and Borders


Police have now set up a fraud and corruption investigation. It even


involves claims that a surveyor, within the council's Property


Conservation Department, enjoyed holidays, paid for by a building


contractor. We believe this contractor was given work totalling


millions of pounds through the statutory notice repairs scheme. In


fact, the more I look at the Property Conservation Department,


the more worrying it seems. The most serious of all the allegations,


we believe the police are looking at, is whether some council


officials were taking bribes or a cut to give builders millions of


pounds worth of work. This could amount to institutional corruption.


How the council awarded contracts to builders is highly controversial.


In our investigation, one company's name keeps cropping up, Action


Building Contracts. We tracked down one job that Action were involved


with at Newtoft Street in Gilmerton. Clark Wilson bought his flat there


in 1998. In 200, the window above the Close came crashing down into


the stairwell. Action Building Contracts were brought in by the


council. The statutory notice instructed the builders to do some


extra work, but not things like new guttering and a new chimney, which


is exactly what Clark got, costing tens of thousands. You weren't even


told this guttering needed to be replaced or any of the roof work?


No, it had just been done. initial quote from Action was just


over �25,000. When he and his neighbours received the final bill,


the total cost of the building work had increased to almost �80,000. A


figure that brought on a feeling of sheer panic. It was like a bad


dream. You weren't going to get away from it. It's something that


you continually worry about, the final bill. It's just out of my


league. People just don't have that lying about. We have a dossier of


information on Clark's case, our experts agreed to take a closer


look. It would have been a simple job to re-point that crack and tidy


tup. They have been examining the extra work carried out and how much


it cost. What caught their eye was how the price of materials had


jumped by the time it appeared in the final bill. The final account


is your check out bill. I don't understand why something priced on


the shelve at a certain rate, at the checkout, in the final account,


is double the rate. It wouldn't happen in the supermarket, it


certainly doesn't happen in construction contracts. In my line


of work, I'd hang my head in shame if I ever had to report to the


client that a job had leapt up like that without any cost control.


According to our experts, Clark is the victim of gross overcharging.


His final bill from Action was almost three times the initial


quote. We have been investigating this story trout -- throughout the


summer, hearing concerns about price rice rises and alleged


corruption in the system. A few days ago we got hold of evidence


that finally proved that council officials were breaking their own


rules. That builders were making money out of contracts they


shouldn't have been awarded. Once again, Action Building Contracts's


name came up. This time, it was at Fowler Terrace in the Polwarth area.


Trevor Thompson runs a business consultancy. The statutory notice


arrived and the quotation seemed fair, but it didn't go quite as


he'd expected. The materials used are breaking down the stone work


rather than fix it. When Trevor Thompson looked at the break down


of cost he found evidence, he says, the company had hidden charges in


the final bill. What they've done, they have used this to fabricate


�15,000 charge for scaffolding for additional times because they said


the job was bigger than it was. This �15,000 is an additional cost


borne by the people here, for this project. Two other builders have


taken a look at these costs and the craftsmanship. They believe Trevor


and his neighbours have been overcharged by �40,000. They will


need to spend another �40,000 to fix all the problems. One of the


reasons why the contractor won this was, apparently, that the other


contracts had a heavy workload. Here we have an e-mail from the


council's representative saying that the other -- indeed the other


companies were in fact busy. This was a key bit of information I


could check out for myself. We were in a building recession in 2008,


when Action were awarded the contract. I've just come off the


MOBILE PHONE RINGS To a contractor who said he was available for work.


He was begging for work at the time. Another contractor said it was,


"jobs for the boys".he felt that some council officials were handing


out work to favourite firms rather than the most competitive tender.


In the space of two years, Action Building Contracts were paid nearly


�2 million by the council. Throughout this time, they weren't


on the council's approved list of frame work contractors. My gut


feeling is that somebody has made from this. Why would somebody


choose not to use the correct procurement system? There must be


some element in there of gain because it's either neglect, or


personal gain, I'm afraid. Action Building Contracts declined to


comment. As did the council on this case. As well as questions about


individual building firms, Ewan Aitken, the former council leader,


is worried that this scandal has undermined confidence in the


council itself. I have seen what appears to be strange decisions,


unexplained decisions, about who gets work, and that worries me


deeply. I've been asking questions, public questions, questions on the


public record about that and not got answers answers. Do you believe


that there are people on the pay roll on the City of Edinburgh


Council who are corrupt? convinced there is something that


has been illegal that has gone on and that has involved a few council


officers. He believes the situation is so serious that it warrants


radical action. I think we need to review every case, at least back to


2005, to say - how was the notice put in place? What was the decision


about what work needed to be done? How was that communicated to the


residents? How was the tender put in place and who got the work and


why they got the work? Until we do that, we won't have understood


whether or not people have paid money who shouldn't have had to


because because of the practice that has again on in the council.


think if you look back at the statutory notices served in the


last five years you would find hundreds were invalid. If


homeowners in Edinburgh looked closely at the justification for


why their notice was issued they might be shocked. In a statement


the City of Edinburgh Council said they commissioned an independent


auditor to investigate allegations of wrong-doing. They added that the


division -- division to have an independent investigation was, "a


sign of how seriously we take the complaints and concerns that have


been raised an our commitment to addressing them". A report updating


councillors about the audit or's investigation is expected to go


before the full council next month. With about 3,000 statutory notices


served every year and many home owners in Edinburgh now contracting


lawyers, this could become an expensive legal nightmare for City


of Edinburgh Council. But just how serious? I think it's, deeply


serious. It's tens of millions, potentially. The council officials


tend to think they are little Gods sitting on their pedestals, just


got every power in the world,. Just do exactly what they want. If you


look at all the scaffolding up around Edinburgh, it's all over the


place. So, it felt like it was a licence for them to print money.


I'm just jord Joe Bloggs on the street. Most people haven't been up


on a roof, or done anything like that in their life. You take it


from the experts are meant to be professionals who you can trust.


Not so long ago the City's statutory notice system was the


envy of other cities around Britain. That system is in a mess. In the


coming months, the council's own investigation will be reporting


back, hone homeowners will be taking legal action and the police


pursuing allegations of fraud and corruption. There's no doubt that


Edinburgh's buildings need to be con served, but what we've


uncovered could discredit the very system which was meant to protect


them. This is Edinburgh. This is the world World Heritage Site. It


has Historic Scotland, it has the National Trust. It has all the


important bodies that have established the policies and fee


loz loss fees for conservation in Scotland. For this to happen in the


centre of this, the centre of excellence, if you like, suggests


something terribly, terribly wrong. Do you think there will be


BBC Scotland Investigates allegations of wrongdoing and corruption in the City of Edinburgh Council.

With council staff suspended and a police investigation under way, reporter Fiona Walker hears from homeowners who feel they've been ripped off after their housing repair bills have rocketed. Edinburgh is proud to have some of the most beautiful and important architecture in Britain but could the very system that is meant to be saving the city's buildings actually be the Capital's next shame? The programme examines Edinburgh's multi-million pound housing repairs system and hears claims that people have been left with massive debts.

The programme also reveals that the council - already dogged by the trams fiasco - could be facing a legal bill of tens of millions of pounds.

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